(Adds analyst reaction, details, background)
By David Ljunggren
OTTAWA Oct 5 Canada's trade deficit in August
shrank to its lowest level in eight months on stronger
non-energy exports, offering further evidence the economy
rebounded strongly in the third quarter.
Statistics Canada on Wednesday said the deficit, the 24th in
a row, was C$1.94 billion ($1.47 billion), down from a revised
C$2.19 billion shortfall in July and less than the C$2.60
billion forecast by analysts in a Reuters poll.
Exports rose by 0.6 percent on the back of a healthy
performance by the consumer goods and metallic products
sections. Overall volumes rose by 0.4 percent while prices edged
up 0.2 percent.
"I guess we can breathe a sigh of relief because export
volumes did rise for a second straight month," said Sal
Guatieri, senior economist at BMO Capital Markets.
Analysts have long predicted exports would rise as the
Canadian dollar remains weak and the U.S. recovery continues.
The data should please the Bank of Canada, which says
non-energy exports are crucial to helping revive an economy
hobbled by low oil prices.
"It's a very good performance. It looks like we're getting
the turnaround we were forecasting," said Peter Hall, chief
economist at Export Development Canada.
The central bank, which had predicted a third-quarter
recovery following a devastating May wildfire in Alberta, is due
to make its next interest rate announcement on Oct. 19 and
Guatieri said the August trade figures reduced the chance of a
"I think the Bank of Canada will just sit back anticipating
further increases in exports going forward," he said.
The Canadian dollar strengthened on the data,
rising to C$1.3188 to the U.S. dollar, or 75.83 U.S. cents, up
from C$1.3208, or 75.71 U.S. cents before the release.
Overall imports were unchanged as energy product imports
fell for the first time in six months.
In a sign of the continuing damage caused by low oil prices,
the cumulative trade deficit for the year to August hit a record
Exports to the United States, which took 74.7 percent of all
Canadian exports in August, fell by 1.6 percent while imports
slipped by 0.1 percent. As a result, Canada's trade surplus with
the United States dropped to C$2.50 billion from C$3.00 billion
One reason for the lower exports was a drop in shipments of
autos to the United States, which coincided with some atypical
shutdowns at Canadian manufacturing plants.
(Additional reporting by Fergal Smith in Toronto; Editing by
Jeffrey Benkoe and Meredith Mazzilli)